Wendy’s Franchisee Meritage Hospitality Files for Chapter 11 Bankruptcy

Meritage Hospitality Group, one of Wendy’s largest U.S. franchise operators, has filed for Chapter 11 bankruptcy protection after weaker restaurant sales, rising food costs and growing financial pressure across the fast-food chain.

The Grand Rapids-based company filed its bankruptcy case Thursday, September 17, in the U.S. Bankruptcy Court for the Western District of Michigan. Meritage operates 314 Wendy’s restaurants across 15 states and employs about 9,000 people.

Meritage is an independent Wendy’s franchisee. The Wendy’s Company itself has not filed for bankruptcy.

Meritage represents roughly 5% of Wendy’s U.S. restaurant system. The company says its restaurants are expected to remain open while employees continue receiving wages and benefits, subject to court approval of its initial requests.

Its Wendy’s locations span Arkansas, Connecticut, Florida, Georgia, Indiana, Massachusetts, Michigan, Missouri, Mississippi, North Carolina, Ohio, Oklahoma, Tennessee, Texas and Virginia. Meritage also operates one Bojangles location and five independently branded restaurants.

The company has been part of the Wendy’s system for more than 25 years, making the bankruptcy significant well beyond a small group of struggling restaurants.

Meritage said “sustained system-wide headwinds affecting the broader Wendy’s brand” had significantly weakened its finances. After working with lenders and Wendy’s for more than a year, its board concluded that Chapter 11 offered the best path to address debt and stabilize the business.

Chapter 11 allows Meritage to keep running restaurants while it restructures debt, financing and other obligations under bankruptcy court supervision.

The company had already made substantial changes before filing.

Earlier this year, Meritage closed about 60 underperforming Wendy’s restaurants. It also reduced operating expenses and changed or eliminated breakfast service at some locations in an effort to improve restaurant profitability.

Those measures followed a difficult 2025. Meritage CEO Bob Schermer Jr. told investors in June that store-level earnings before interest, taxes, depreciation and amortization fell 48% during the year. Rising beef prices and heavier discounting contributed to the decline.

Wendy’s has also been dealing with weaker sales across its broader U.S. system.

The company reported in August that U.S. same-restaurant sales fell 7% during the second quarter of 2026 compared with a year earlier. U.S. systemwide sales declined 8.2%, while customer traffic remained under pressure.

Wendy’s CEO Bob Wright acknowledged those problems when the results were released, saying the company’s traffic, value proposition and franchisee economics were falling short of expectations. The chain has since outlined a turnaround plan focused on menu value, marketing, restaurant operations, digital engagement and growth.

Those pressures hit franchisees directly because restaurant-level expenses such as labor, food, rent and franchise obligations continue even as customer traffic falls.

Beef costs have been particularly difficult. Wendy’s previously reported that average franchisee profitability fell during 2025, with commodity inflation, especially beef prices, accounting for much of the decline.

Meritage’s bankruptcy filing shows how those pressures have affected one of the chain’s largest operators.

The company’s lead bankruptcy petition estimated both assets and liabilities between $10 million and $50 million. Court records identify Wendy’s franchising business, Quality Is Our Recipe LLC, as Meritage’s largest unsecured creditor, with a claim of approximately $24.9 million tied to deferred franchise fees.

Meritage has also faced a much larger dispute with lender City National Bank. Restaurant industry reporting says the company owed approximately $150 million under a credit facility that the bank declared in default in 2025. Meritage disputed that default at the time.

The company is now seeking debtor-in-possession financing to support operations during the Chapter 11 case. The financing can provide cash for payroll, suppliers, and other expenses while Meritage works through its restructuring.

Court approval will also be required for several early requests intended to keep the business functioning while the company develops a broader plan addressing debt, franchise obligations and its restaurant portfolio.

Additional restaurant closures remain possible. Meritage has already spent much of the year reducing its footprint and concentrating on locations it believes can perform more strongly.

The filing arrives during a difficult period across the restaurant industry, as consumers become more selective about dining out and increasingly focused on price and value.

Fast-food chains have responded with discounts and value meals aimed at bringing customers back. Those promotions can support traffic while putting added pressure on restaurant-level margins when ingredient, labor, and operating costs remain elevated.

Hundreds of Wendy’s locations and thousands of jobs are now tied to the outcome of Meritage’s restructuring.

The restructuring will determine how much debt the company can address, which restaurants remain part of its portfolio, and whether additional locations will close as Meritage tries to build a more sustainable business while Wendy’s works through its broader sales and traffic slowdown.